CAMBRIDGE, Mass.–(BUSINESS WIRE)–HubSpot, Inc. (NYSE: HUBS), the customer relationship management (CRM) platform for scaling companies, today announced financial results for the fourth quarter and full year ended December 31, 2022.
Financial Highlights:
Revenue
Fourth Quarter 2022:
Total revenue was $469.7 million, up 27% compared to Q4’21.
Subscription revenue was $458.2 million, up 28% compared to Q4’21.
Professional services and other revenue was $11.5 million, up 8% compared to Q4’21.
Full Year 2022:
Total revenue was $1.731 billion, up 33% compared to 2021.
Subscription revenue was $1.691 billion, up 34% compared to 2021.
Professional services and other revenue was $40.4 million, down 5% compared to 2021.
Operating Income (Loss)
Fourth Quarter 2022:
GAAP operating margin was (2.9%), compared to (2.2%) in Q4’21.
Non-GAAP operating margin was 13.6%, compared to 10.3% in Q4’21.
GAAP operating loss was ($13.5) million, compared to ($8.2) million in Q4’21.
Non-GAAP operating income was $64.0 million, compared to $38.2 million in Q4’21.
Full Year 2022:
GAAP operating margin was (6.3%), compared to (4.2%) in 2021.
Non-GAAP operating margin was 9.8%, compared to 9.0% in 2021.
GAAP operating loss was ($109.1) million, compared to ($54.8) million in 2021.
Non-GAAP operating income was $169.1 million, compared to $117.6 million in 2021.
Net Income (Loss)
Fourth Quarter 2022:
GAAP net loss was ($15.6) million, or ($0.32) per basic and diluted share, compared to ($16.4) million, or ($0.35) per basic and diluted share in Q4’21.
Non-GAAP net income was $56.8 million, or $1.17 per basic and $1.11 per diluted share, compared to $29.6 million, or $0.63 per basic and $0.58 per diluted share in Q4’21.
Weighted average basic and diluted shares outstanding for GAAP net loss per share was 48.8 million, compared to 47.3 million basic and diluted shares in Q4’21.
Weighted average basic and diluted shares outstanding for non-GAAP net income per share was 48.8 million and 51.1 million respectively, compared to 47.3 million and 50.9 million, respectively in Q4’21.
Full Year 2022:
GAAP net loss was ($112.7) million, or ($2.35) per basic and diluted share, compared to ($77.8) million, or ($1.66) per basic and diluted share in 2021.
Non-GAAP net income was $141.8 million, or $2.95 per basic and $2.78 per diluted share, compared to $92.5 million, or $1.97 per basic and $1.82 per diluted share in 2021.
Weighted average basic and diluted shares outstanding for GAAP net loss per share was 48.1 million, compared to 46.9 million basic and diluted shares in 2021.
Weighted average basic and diluted shares outstanding for non-GAAP net income per share was 48.1 million and 51.1 million respectively, compared to 46.9 million and 50.7 million, respectively in 2021.
Balance Sheet and Cash Flow
The company’s cash, cash equivalents, and short-term and long-term investments balance was $1.5 billion as of December 31, 2022.
During the fourth quarter, the company generated $90.0 million of cash from operating activities and operating cash flow, compared to $95.2 million of cash from operating activities and $97.2 million of operating cash flow, which excluded the $2.0 million used for the repayment of its convertible notes, during Q4’21.
During the fourth quarter, the company generated $70.9 million of free cash flow, compared to $78.3 million during Q4’21.
During 2022, the company generated $273.2 million of cash from operating activities and operating cash flow, compared to $238.7 million of cash from operating activities and $265.2 million of operating cash flow, which excluded the $26.4 million used for the repayment of its convertible notes, during 2021.
The company generated $191.4 million of free cash flow during 2022, compared to $203.3 million during 2021.
Additional Recent Business Highlights
Grew Customers to 167,386 at December 31, 2022, up 24% from December 31, 2021.
Average Subscription Revenue Per Customer was $11,231 during the fourth quarter of 2022, up 3% compared to the fourth quarter of 2021.
“I’m proud of the way our team stepped up to the challenging macroeconomic conditions that emerged in 2022. We executed well and helped our customers navigate choppy waters,” said Yamini Rangan, Chief Executive Officer at HubSpot. “We focused on product innovation and showing the value HubSpot can deliver. As a result, we increasingly see HubSpot becoming the platform of choice for SMBs. Looking ahead, we have a tremendous opportunity in 2023 to help our customers grow and make progress on our vision of becoming the #1 CRM platform for scaling companies. We’ve taken the hard but necessary steps to restructure our business so we’re better positioned to navigate the current environment and emerge stronger long-term. Our mission of helping millions of organizations grow better is as exciting as ever.”
Business Outlook
Based on information available as of February 16, 2023, HubSpot is issuing guidance for the first quarter of 2023 and full year 2023 as indicated below.
First Quarter 2023:
Total revenue is expected to be in the range of $473.0 million to $475.0 million.
Unfavorable foreign exchange rates are expected to be a 4 point headwind to first quarter 2023 revenue growth(1).
Non-GAAP operating income is expected to be in the range of $45.0 million to $47.0 million(2).
Non-GAAP net income per common share is expected to be in the range of $0.82 to $0.84(2). This assumes approximately 51.5 million weighted average diluted shares outstanding.
Full Year 2023:
Total revenue is expected to be in the range of $2.050 billion to $2.060 billion.
Unfavorable foreign exchange rates are expected to be a one point headwind to full year 2023 revenue growth(1).
Non-GAAP operating income is expected to be in the range of $248.0 million to $252.0 million(2).
Non-GAAP net income per common share is expected to be in the range of $4.24 to $4.32(2). This assumes approximately 52.2 million weighted average diluted shares outstanding.
(1) Foreign exchange rates impact on revenue is calculated by comparing current period rates with prior period average rates.
(2)The impact of restructuring charges, which include employee severance and lease consolidation costs, are excluded from our non-GAAP operating income and non-GAAP net income per common share business outlook.
Use of Non-GAAP Financial Measures
In our earnings press releases, conference calls, slide presentations, and webcasts, we may use or discuss non-GAAP financial measures, as defined by Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed, and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure, are included in this press release after the consolidated financial statements. Our earnings press releases containing such non-GAAP reconciliations can be found in the Investors section of our website ir.hubspot.com.
Conference Call Information
HubSpot will host a conference call on Thursday February 16, 2023 at 4:30 p.m. Eastern Time (ET) to discuss the company’s fourth quarter and full year 2022 financial results and its business outlook. To register for this conference call, please use this dial in registration link or visit HubSpot’s Investor Relations website at ir.hubspot.com. After registering, a confirmation email will be sent, including dial-in details and a unique code for entry. Participants who wish to register for the conference call webcast please use this link.
Following the conference call, a replay will be available at (866) 813-9403 (domestic) or +44 204-525-0658 (international). The replay passcode is 434716. An archived webcast of this conference call will also be available on HubSpot’s Investor Relations website at ir.hubspot.com.
The company has used, and intends to continue to use, the investor relations portion of its website as a means of disclosing material non-public information and for complying with disclosure obligations under Regulation FD.
About HubSpot
HubSpot is a leading CRM platform that provides software and support to help companies grow better. The platform includes marketing, sales, service, operations, and website management products that start free and scale to meet our customers’ needs at any stage of growth. Today, over 167,000 customers across more than 120 countries use HubSpot’s powerful and easy-to-use tools and integrations to attract, engage, and delight customers. Learn more at www.hubspot.com.
Cautionary Language Concerning Forward-Looking Statements
This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding management’s expectations of future financial and operational performance and operational expenditures, expected growth, foreign currency movement, and business outlook, including our financial guidance for the first fiscal quarter of and full year 2023; statements regarding our positioning for future growth and market leadership; statements regarding the economic environment; and statements regarding expected market trends, future priorities and related investments, and market opportunities. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, risks associated with our history of losses; our recent reduction in force, including risks that the related costs and charges may be greater than anticipated and that the restructuring efforts may not generate their intended benefits, may adversely affect the Company’s internal programs and the Company’s ability to recruit and retain skilled and motivated personnel, and may be distracting to employees and management; our ability to retain existing customers and add new customers; the continued growth of the market for a CRM platform; our ability to differentiate our platform from competing products and technologies; our ability to manage our growth effectively over the long-term to maintain our high level of service; our ability to maintain and expand relationships with our solutions partners; the price volatility of our common stock; the impact of geopolitical conflicts, inflation, foreign currency movement, macroeconomic instability, and the COVID-19 pandemic on our business, the broader economy, our workforce and operations, the markets in which we and our partners and customers operate, and our ability to forecast our future financial performance; and other risks set forth under the caption “Risk Factors” in our SEC filings. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
Consolidated Balance Sheets
(in thousands)
December 31,
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
331,022
$
377,013
Short-term investments
1,081,662
820,962
Accounts receivable
226,849
157,362
Deferred commission expense
70,992
59,849
Prepaid expenses and other current assets
44,074
38,388
Total current assets
1,754,599
1,453,574
Long-term investments
112,791
174,895
Property and equipment, net
105,227
96,134
Capitalized software development costs, net
63,790
39,858
Right-of-use assets
319,304
280,828
Deferred commission expense, net of current portion
66,559
42,681
Other assets
58,795
29,244
Intangible assets, net
17,446
10,565
Goodwill
46,227
47,075
Total assets
$
2,544,738
$
2,174,854
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
20,883
$
2,773
Accrued compensation costs
62,846
63,836
Accrued expenses and other current liabilities
102,122
74,457
Convertible senior notes
—
19,630
Operating lease liabilities
35,928
26,364
Deferred revenue
539,874
430,414
Total current liabilities
761,653
617,474
Operating lease liabilities, net of current portion
316,184
283,873
Deferred revenue, net of current portion
5,904
4,473
Other long-term liabilities
14,546
12,134
Convertible senior notes, net of current portion
454,227
383,101
Total liabilities
1,552,514
1,301,055
Stockholders’ equity:
Common stock
49
47
Additional paid-in capital
1,647,446
1,436,089
Accumulated other comprehensive loss
(12,890
)
(1,339
)
Accumulated deficit
(642,381
)
(560,998
)
Total stockholders’ equity
992,224
873,799
Total liabilities and stockholders’ equity
$
2,544,738
$
2,174,854
Consolidated Statements of Operations
(in thousands, except per share data)
For the Three Months Ended December 31,
For the Year Ended December 31,
2022
2021
2022
2021
Revenues:
Subscription
$
458,152
$
358,657
$
1,690,538
$
1,258,319
Professional services and other
11,506
10,652
40,431
42,339
Total revenue
469,658
369,309
1,730,969
1,300,658
Cost of revenues:
Subscription
66,051
58,599
257,513
211,132
Professional services and other
14,214
13,040
56,746
47,725
Total cost of revenues
80,265
71,639
314,259
258,857
Gross profit
389,393
297,670
1,416,710
1,041,801
Operating expenses:
Research and development
116,334
82,997
442,022
301,970
Sales and marketing
235,132
180,845
886,069
649,681
General and administrative
51,413
42,065
197,720
144,949
Total operating expenses
402,879
305,907
1,525,811
1,096,600
Loss from operations
(13,486
)
(8,237
)
(109,101
)
(54,799
)
Other expense:
Interest income
7,777
126
15,000
1,173
Interest expense
(941
)
(5,905
)
(3,762
)
(30,282
)
Other (expense) income
(6,244
)
(974
)
(6,829
)
10,090
Total other income (expense)
592
(6,753
)
4,409
(19,019
)
Loss before income tax expense
(12,894
)
(14,990
)
(104,692
)
(73,818
)
Income tax expense
(2,744
)
(1,380
)
(8,057
)
(4,019
)
Net loss
$
(15,638
)
$
(16,370
)
$
(112,749
)
$
(77,837
)
Net loss per share, basic and diluted
$
(0.32
)
$
(0.35
)
$
(2.35
)
$
(1.66
)
Weighted average common shares used in computing basic and diluted net loss per share:
48,787
47,304
48,065
46,891
Consolidated Statements of Cash Flows
(in thousands)
For the Three Months Ended December 31,
For the Year Ended December 31,
2022
2021
2022
2021
Operating Activities:
Net loss
$
(15,638
)
$
(16,370
)
$
(112,749
)
$
(77,837
)
Adjustments to reconcile net loss to net cash and cash equivalents provided by operating activities
Depreciation and amortization
15,525
11,970
58,150
45,159
Stock-based compensation
76,768
45,914
275,849
166,761
Loss on early extinguishment of 2022 Convertible Notes
—
68
—
4,892
Repayment of 2022 Convertible Notes attributable to the debt discount
—
(1,971
)
—
(26,428
)
Gain on strategic investments
—
(2
)
(4,201
)
(11,741
)
Impairment of strategic investments
5,863
—
5,863
—
Gain on termination of operating leases
—
—
—
(4,276
)
Loss on disposal of fixed assets
—
—
—
6,468
Benefit from deferred income taxes
(1,533
)
(1,548
)
(2,122
)
(2,869
)
Amortization of debt discount and issuance costs
504
5,393
2,013
23,507
(Accretion) amortization of bond discount
(5,851
)
1,332
(9,118
)
4,275
Unrealized currency translation
530
701
1,010
1,304
Changes in assets and liabilities
Accounts receivable
(53,850
)
(31,859
)
(73,985
)
(34,107
)
Prepaid expenses and other assets
2,878
6,072
(5,987
)
(1,077
)
Deferred commission expense
(15,373
)
(8,189
)
(37,583
)
(32,560
)
Right-of-use assets
9,909
4,470
29,531
31,418
Accounts payable
7,617
1,343
18,277
(10,608
)
Accrued expenses and other liabilities
15,920
20,025
32,375
58,209
Operating lease liabilities
(6,529
)
(3,056
)
(21,118
)
(29,478
)
Deferred revenue
53,226
60,891
116,969
127,716
Net cash and cash equivalents provided by operating activities
89,966
95,184
273,174
238,728
Investing Activities:
Purchases of investments
(248,951
)
(447,431
)
(1,507,870
)
(1,484,762
)
Maturities of investments
167,200
446,722
1,184,506
1,387,498
Sale of investments
—
—
124,998
—
Purchases of property and equipment
(6,042
)
(11,327
)
(37,426
)
(28,726
)
Purchases of intangible assets
—
—
(10,000
)
—
Acquisition of a business, net of cash acquired
—
—
—
(16,810
)
Purchases of strategic investments
(6,499
)
(2,887
)
(26,371
)
(13,089
)
Proceeds from sale of strategic investments
—
12,620
—
12,620
Payments for equity method investments
(1,250
)
—
(3,150
)
(3,100
)
Capitalization of software development costs
(12,995
)
(7,501
)
(44,345
)
(33,139
)
Net cash and cash equivalents used in investing activities
(108,537
)
(9,804
)
(319,658
)
(179,508
)
Financing Activities:
Proceeds from settlement of Convertible Note Hedges related to the 2022 Convertible Notes
—
8,256
60,483
8,985
Payments for settlement of Warrants related to the 2022 Convertible Notes
(34
)
—
(34
)
—
Payment for settlement of 2022 Convertible Notes
—
(9,097
)
(79,807
)
(89,525
)
Repayment of 2025 Convertible Notes attributable to the principal
—
—
(1,619
)
—
Employee taxes paid related to the net share settlement of stock-based awards
(1,572
)
(5,711
)
(11,526
)
(17,439
)
Proceeds related to the issuance of common stock under stock plans
10,213
12,386
39,931
46,510
Net cash and cash equivalents provided by (used in) financing activities
8,607
5,834
7,428
(51,469
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
9,451
(2,535
)
(6,811
)
(8,861
)
Net (decrease) increase in cash, cash equivalents and restricted cash
(513
)
88,679
(45,867
)
(1,110
)
Cash, cash equivalents and restricted cash, beginning of period
334,688
291,363
380,042
381,152
Cash, cash equivalents and restricted cash, end of period
$
334,175
$
380,042
$
334,175
$
380,042
Reconciliation of non-GAAP operating income and operating margin
(in thousands, except percentages)
Three Months Ended December 31,
For the Year Ended December 31,
2022
2021
2022
2021
GAAP operating loss
$
(13,486
)
$
(8,237
)
$
(109,101
)
$
(54,799
)
Stock-based compensation
76,768
45,914
275,849
166,761
Amortization of acquired intangible assets
729
318
2,629
1,326
Acquisition/disposition related expenses (income)
—
170
(305
)
2,087
Gain on termination of operating leases
—
—
—
(4,276
)
Loss on disposal of fixed assets
—
—
—
6,468
Non-GAAP operating income
$
64,011
$
38,165
$
169,072
$
117,567
GAAP operating margin
(2.9
%)
(2.2
%)
(6.3
%)
(4.2
%)
Non-GAAP operating margin
13.6
%
10.3
%
9.8
%
9.0
%
Reconciliation of non-GAAP net income
(in thousands, except per share amounts)
Three Months Ended December 31,
For the Year Ended December 31,
2022
2021
2022
2021
GAAP net loss
$
(15,638
)
(16,370
)
$
(112,749
)
$
(77,837
)
Stock-based compensation
76,768
45,914
275,849
166,761
Amortization of acquired intangibles assets
729
318
2,629
1,326
Acquisition/disposition related expenses (income)
—
170
(305
)
2,087
Gain on termination of operating leases
—
—
—
(4,276
)
Loss on disposal of fixed assets
—
—
—
6,468
Non-cash interest expense for amortization of debt discount and debt issuance costs
504
5,393
2,013
23,507
Impairment of (gain on) strategic investments
5,863
(2
)
1,662
(11,741
)
Loss on early extinguishment of 2022 Convertible Notes
—
68
—
4,892
Loss on equity method investment
87
150
125
371
Income tax effects of non-GAAP items
(11,467
)
(6,024
)
(27,399
)
(19,096
)
Non-GAAP net income
$
56,846
29,617
$
141,825
$
92,462
Non-GAAP net income per share:
Basic
$
1.17
$
0.63
$
2.95
$
1.97
Diluted
$
1.11
$
0.58
$
2.78
$
1.82
Shares used in non-GAAP per share calculations
Basic
48,787
47,304
48,065
46,891
Diluted
51,094
50,888
51,099
50,694
Reconciliation of non-GAAP expense and expense as a percentage of revenue
(in thousands, except percentages)
Three Months Ended December 31,
2022
2021
COS, Subs-
cription
COS, Prof. services & other
R&D
S&M
G&A
COS, Subs-
cription
COS, Prof. services & other
R&D
S&M
G&A
GAAP expense
$
66,051
$
14,214
$
116,334
$
235,132
$
51,413
$
58,599
$
13,040
$
82,997
$
180,845
$
42,065
Stock -based compensation
(2,560
)
(1,113
)
(30,248
)
(30,557
)
(12,290
)
(1,742
)
(821
)
(16,600
)
(17,511
)
(9,240
)
Amortization of acquired intangible assets
(283
)
—
—
(446
)
—
(228
)
—
—
(90
)
—
Acquisition/disposition related expense
—
—
—
—
—
—
—
(131
)
—
(39
)
Non-GAAP expense
$
63,208
$
13,101
$
86,086
$
204,129
$
39,123
$
56,629
$
12,219
$
66,266
$
163,244
$
32,786
GAAP expense as a percentage of revenue
14.1
%
3.0
%
24.8
%
50.1
%
10.9
%
15.9
%
3.5
%
22.5
%
49.0
%
11.4
%
Non-GAAP expense as a percentage of revenue
13.5
%
2.8
%
18.3
%
43.5
%
8.3
%
15.3
%
3.3
%
17.9
%
44.2
%
8.9
%
For the Year Ended December 31,
2022
2021
COS, Subs-
cription
COS, Prof. services & other
R&D
S&M
G&A
COS, Subs-
cription
COS, Prof. services & other
R&D
S&M
G&A
GAAP expense
$
257,513
$
56,746
$
442,022
$
886,069
$
197,720
$
211,132
$
47,725
$
301,970
$
649,681
$
144,949
Stock -based compensation
(9,076
)
(4,393
)
(107,517
)
(107,640
)
(47,223
)
(6,297
)
(3,092
)
(61,614
)
(67,413
)
(28,345
)
Amortization of acquired intangible assets
(1,203
)
—
—
(1,426
)
—
(937
)
—
—
(389
)
—
Acquisition/disposition related income (expenses)
—
—
300
—
5
—
—
(1,152
)
(367
)
(568
)
Gain on termination of operating leases
—
—
—
—
—
395
275
1,346
1,839
421
Loss on disposal of fixed assets
—
—
—
—
—
(600
)
(415
)
(2,036
)
(2,781
)
(636
)
Non-GAAP expense
$
247,234
$
52,353
$
334,805
$
777,003
$
150,502
$
203,693
$
44,493
$
238,514
$
580,570
$
115,821
GAAP expense as a percentage of revenue
14.9
%
3.3
%
25.5
%
51.2
%
11.4
%
16.2
%
3.7
%
23.2
%
50.0
%
11.1
%
Non-GAAP expense as a percentage of revenue
14.3
%
3.0
%
19.3
%
44.9
%
8.7
%
15.7
%
3.4
%
18.3
%
44.6
%
8.9
%
Contacts
Investor Relations Contact:
Charles MacGlashing
investors@hubspot.com
Media Contact:
media@hubspot.com